Buy USD/JPY, GBP/JPY On Any Pullbacks Ahead Of BoJ January Meeting - Barclays

JPY weakness continued to attract investor attention, even though its pace was exacerbated somewhat by thin year-end liquidity.

In that regard, Barclays Capital advises its clients to leverage any JPY corrections in the near term to establish fresh long USD/JPY, GBP/JPY positions or to re-long at better levels ahead of the BoJ Jan 21-22 meting.

"The political pressure from Abe’s administration on the BoJ to adopt more aggressive easing stance should continue to provide support for JPY-crosses, limiting its downside into the next BoJ meeting on January 21-22," Barclays clarifies.

"We expect the BoJ to downgrade its GDP forecast and announce another JPY 10trn expansion of APP, centered on TBs and JGBs. On the price stability front, we think it is feasible to make changes without amending the Bank of Japan Act, but our economists see little chance that the BoJ will launch a 2% inflation target next month, and think that 1% “target” or “1-2%” would be more reasonable," Barclays adds.